UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________________
Commission file number 0-11226
GOLDEN CYCLE GOLD CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO 84-0630963
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1515 South Tejon, Suite 201,
Colorado Springs, Colorado 80906
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 471-9013
_____________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
the filing requirements for the past 90 days. YES XX NO
Number of Shares outstanding at March 31, 2000: 1,888,450
PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
BALANCE SHEETS
March 31, December 31,
2000 1999
(Unaudited)
_________ _________
Assets
_________________________________________
Current assets:
Cash and cash equivalents $ 34,287 $ 152,581
Short-term investments 1,468,104 1,164,805
Interest receivable and other
current assets 38,975 38,489
_________ _________
Total current assets 1,541,366 1,355,875
Note receivable 202,257 202,257
Assets held for sale (net) 132,680 132,680
Property and equipment, at cost:
Land 2,025 2,025
Furniture and fixtures 8,500 8,500
Machinery and equipment 30,686 30,686
_________ _________
41,211 41,211
Less accumulated depreciation (33,771) (33,144)
_________ _________
7,440 8,067
Investment in mining joint venture (Note 2) - -
_________ _________
Total assets $ 1,883,743 $ 1,698,879
Liabilities and Shareholders' Equity
_________________________________________
Accounts payable and accrued liabilities $ (709) $ 14,078
Shareholders' equity:
Common Stock - no par value.
Authorized 3,500,000 shares;
issued and outstanding
1,888,450 shares 7,116,604
7,116,604
Additional paid-in capital 1,927,736 1,927,736
Accumulated deficit (7,131,848) (7,331,499)
Accumulated comprehensive loss (28,040) (28,040)
_________ _________
Total shareholders' equity 1,884,452 1,684,801
_________ _________
$ 1,883,743 $ 1,698,879
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS
AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED
March 31, 2000 and 1999
(Unaudited)
Three Months Ended
March 31,
____________________
2000
1999
_________ _________
Revenue:
Distribution from mining joint
venture in excess of
carrying value $ 250,000 $ 250,000
_________ _________
Total operating revenue 250,000 250,000
Expenses:
General and administrative (69,064) (171,872)
_________ _________
Operating income 180,936 78,128
Other income-
Interest and other income 18,715 17,294
_________ _________
Net income $ 199,651 $ 95,422
_________ _________
Other comprehensive loss-
Foreign currency translation
adjustments - -
_________ _________
Comprehensive income $ 199,651 $ 95,422
_________ _________
Income per share $ 0.11 $ 0.05
Weighted average common
shares outstanding 1,888,450 1,878,450
ACCUMULATED DEFICIT:
Beginning of period $(7,331,499) $(6,961,424)
_________ _________
End of Period (7,131,848) (6,866,002)
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
March 31, 2000 and 1999
(Unaudited)
2000 1999
__________ __________
Cash flows from operating activities:
Net Income $ 199,651 $ 95,422
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense 627 627
Decrease (increase) in interest
receivable and other current
assets (486) 6,181
Decrease in accounts payable
and accrued liabilities (14,787) (10,974)
__________ __________
Net cash provided by
operating activities 185,005 91,256
__________ __________
Cash flows from investing activities:
Increase in short-term
investments, net (303,299) (98,076)
Increase in other assets - (1,393)
Disposal of property and
equipment, net - 6,190
__________ __________
Net cash used in investing
activities (303,299) (93,279)
__________ __________
Net decrease in
cash and cash equivalents (118,294) (2,023)
Cash and cash equivalents, beginning of period 152,581 13,734
__________ __________
Cash and cash equivalents, end of period $ 34,287 $ 11,711
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements (other than the Balance Sheet at
December 31, 1999) are unaudited but, in the opinion of management, include
all adjustments, consisting solely of normal recurring items, necessary for
a fair presentation. Interim results are not necessarily indicative of
results for a full year.
These financial statements should be read in conjunction with the
financial statements and notes thereto which are included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999. The
accounting policies set forth in those annual financial statements are the
same as the accounting policies utilized in the preparation of these
financial statements, except as modified for appropriate interim financial
statement presentation.
(2) INVESTMENT IN JOINT VENTURE
The Company accounts for its investment in the Cripple Creek & Victor
Gold Mining Company (the "Joint Venture") on the equity method. During 1992,
the Company's investment balance in the Joint Venture was reduced to zero.
Joint Venture distributions in excess of the investment carrying value are
recorded as income, as the Company is not required to finance the Joint
Venture's operating losses or capital expenditures. Correspondingly, the
Company does not record its share of Joint Venture losses incurred subsequent
to the reduction of its investment balance to zero. To the extent the Joint
Venture is subsequently profitable, the Company will not record its share of
equity income until the cumulative amount of previously unrecorded Joint
Venture losses has been recouped. As of March 31, 2000, the Company's share
of accumulated unrecorded losses from the Joint Venture was $10,585,658.
(3) EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the
weighted
average number of shares of common stock outstanding during each period.
There are no dilutive securities outstanding in either period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's principal mining investment and source of cash flows has
been its interest in the Joint Venture. The Joint Venture engages in gold
mining activity in the Cripple Creek area of Colorado. The Company's Joint
Venture co-venturer is AngloGold Colorado ("AngloGold", formerly Pikes Peak
Mining Company), a wholly-owned subsidiary of AngloGold North America Inc.,
which is a wholly owned subsidiary of AngloGold Ltd.
The Company's rights and obligations relating to its Joint Venture
interest are governed by the Joint Venture Agreement. The Joint Venture is
currently, and for the foreseeable future will be, operating in the Initial
Phase, as defined. In accordance with the Joint Venture Agreement, AngloGold
manages the Joint Venture, and is required to finance all operations and
capital expenditures during the Initial Phase.
The Initial Phase will terminate after Initial Loans, as defined, have
been repaid and Net Proceeds (defined generally as gross revenues less
operating costs including AngloGold's administrative fees) of $58 million
have been distributed to the venture participants in the proportion of 80% to
AngloGold and 20% to the Company. Initial Loans generally constitute funds
loaned to the Joint Venture, and interest thereon, to finance operations and
mine development by either AngloGold or third-party financial institutions
and are repayable prior to distributions to the venture participants.
AngloGold (the "Manager") reported that Initial Loans, payable to AngloGold,
of approximately $177.5 million were outstanding at March 31, 2000. Under
the Agreement as amended, the Joint Venture has not earned or distributed any
Net Proceeds.
After the Initial Phase, the Joint Venture will distribute metal in
kind
in the proportion of 67% to AngloGold and 33% to the Company, and the venture
participants will be responsible for their proportionate share of the Joint
Venture costs.
During the Initial Phase, the Company is entitled to receive a Minimum
Annual Distribution of $250,000. Minimum Annual Distributions received after
1993 constitute an advance of Net Proceeds. Accordingly, such Net Proceeds
advances will be recouped from future Net Proceeds distributions allocable to
the Company. Based on the amount of Initial Loans payable to the Manager and
the recurring operating losses incurred by the Joint Venture, management of
the Company believes that, absent a significant and sustained increase in the
prevailing market prices for gold, it is unlikely that the Company will
receive more than the Minimum Annual Distribution from the Joint Venture in
the foreseeable future.
Cash provided by operations was approximately $185,000 and $91,000 in
the 2000 and 1999 periods respectively. Prior to 1993, the $250,000 Minimum
Annual Distribution was classified as an investing cash flow; beginning in
1993, the Minimum Annual Distribution was reflected as an operating cash flow
by reason of the fact that the Joint Venture investment balance was reduced
to zero during 1992, as discussed below under "Results of Operations". The
Minimum Annual Distribution was received from the Joint Venture January 24,
2000. No further distributions are expected from the Joint Venture during
the remainder of 2000.
Cash provided by operations during the 2000 period increased from the
1999 period by approximately $94,000 primarily due to decreased general and
administrative expenses.
The Company's working capital was approximately $1,542,000 at March 31,
2000 compared to $1,745,000 at March 31, 1999. Working capital decreased by
approximately $203,000 at March 31, 2000 compared to March 31, 1999. The
decrease was primarily due to increased general and administrative expenses
during 1999 and, in part, to severance payments to the former chief executive
officer.
Management believes that the Company's working capital, augmented by
the
Minimum Annual Distribution, is adequate to support operations at the current
level for several years, barring unforeseen events. Although there can be no
assurance, the Company anticipates the closure of its sale of certain Water
Rights to the City of Cripple Creek during the year 2000 which will provide
dditional working capital. The Company anticipates that its Philippine
subsidiary will hold all work on a standby basis until the MPSA is awarded to
the claim owner. If opportunities to economically pursue or expand
Philippine operations, or any other opportunity becomes available, and the
Company elects to pursue them, additional working capital may also be
required. There is no assurance that the Company will be able to obtain such
additional capital, if required, or that such capital would be available to
the Company on terms that would be acceptable. Furthermore, if any such
operations are commenced, it is not presently known when or if a positive
cash flow could be developed from the properties.
Results of Operations
The Company had net income, for the three months ended March 31, of
approximately $200,000 in 2000, compared to net income of approximately
$95,000 in the 1999 period.
The increase in net income for the first three months of 2000 compared
with the corresponding period in 1999 was due to decreased general and
administrative expenses and slightly increased interest revenue during the
2000 period.
The Company accounts for its investment in the Joint Venture on the
equity method. During 1992, the Company's investment balance in the Joint
Venture was reduced to zero. Joint Venture distributions in excess of the
investment carrying value are recorded as income as received, as the Company
is not required to finance the Joint Venture's operating losses or capital
expenditures. Correspondingly, the Company does not record its share of
Joint Venture losses incurred subsequent to the reduction of its investment
balance to zero. To the extent the Joint Venture is subsequently profitable,
the Company will not record its share of equity income until the cumulative
amount of previously unrecorded Joint Venture losses has been recouped. As
of March 31, 2000, the Company's share of accumulated unrecorded losses from
the Joint Venture was $10,585,658.
The Joint Venture incurred a net loss of approximately $2.7 million for
the three months ended March 31, 2000 as compared to a net loss of $2.0
million for the corresponding period in 1999. The Joint Venture recorded a
net loss of $7.4 million for the year ended December 31, 1999 compared to a
net losses of $11.8 million and $10.8 million for the years ended December
31, 1998 and 1997 respectively. There is no assurance that the Joint Venture
will be able to achieve profitability in any subsequent period or to sustain
profitability for an extended period. The ability of the Joint Venture to
sustain profitability is dependent upon a number of factors, including
without limitation, the market price of gold, which is currently near recent
historically low levels and volatile and subject to speculative movement, a
variety of factors beyond the Joint Venture's control, and the efficiency of
the Cresson mining operation.
Whether future gold prices and the results of the Joint Venture's
operations will reach and maintain a level necessary to repay the Initial
Loans, complete the Initial Phase, and thereafter generate net income cannot
be assured. Based on the amount of Initial Loans payable to the Manager and
the uncertainty of future operating revenues, management of the Company
believes that, without a significant and sustained increase in the prevailing
market price for gold, it is unlikely that the Company will receive more than
the Minimum Annual Distribution from the Joint Venture in the foreseeable
future.
PART II - OTHER INFORMATION
Item 1 through 4 are not being reported due to a lack of circumstances
that require a response.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits: None
b. Reports on Form 8-K: None
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GOLDEN CYCLE GOLD CORPORATION
(Registrant)
R. Herbert Hampton
President, C.E.O. and Treasurer
(as both a duly authorized officer
of Registrant and
as principal financial officer of
Registrant)
May 12, 2000